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Finance Commission Minutes October 11, 2016 – Draft Minutes Page 3 of 8 Commissioner Hodder expressed concerns that the City has relied on reserves over the last 89 couple of years to help balance the budget and keep the tax levy increase lower. This is not a 90 sustainable trend. 91 92 Commissioner Bachhuber stated the Commission should inform the Council that the reserves are 93 projected to be out of the target range by 2017 and the Commission recommends that future 94 budgets should not use reserves until the fund balance is in the goal range. He also stated these 95 funds include CIP dollars and taking money from these funds would increase the CIP shortages. 96 He clarified he would highlight the shortage in the Fund that will occur in 2017 and recommend 97 the City Council consider this when looking at the 2018 budget. 98 99 Chair Schroeder stated the Commission should make a recommendation to reduce the amount of 100 reserve used for the 2017 budget because this budget has not been finalized. 101 102 Commissioner Harold stated that the graphs are showing a percentage of the budget and because 103 the budget are increasing the amount that is being added to the budget would need to increase as 104 well in order to keep the funds in target ranges. 105 106 Commissioner Zeller suggested looking at the Reserve Policy and including language that would 107 recommend not spending reserves down once they reach 37%. 108 109 Commissioner Bachhuber moved, Seconded by Commissioner Konidena the Finance 110 Commission highlight for the City Council the General Fund Reserve is now projected to be 111 below the goal range and the Commission suggests the City not spend reserve balances to the 112 degree that it would cause the balance to fall below the goal range. 113 114 Chair Schroeder suggested including the graphs as part of the recommendation. 115 116 The motion was called to a vote. The motion carried unanimously. 117 118 119 Review CIPs from other Cities 120 121 Chair Schroeder stated Finance Director Miller’s memo states that less emphasis is placed on the 122 justification for individual assets in favor of subsequent and more specific discussions during the 123 annual budget process. She asked if this meant that each piece of the budget is not justified 124 unless the City asks for the details. 125 126 Finance Director Miller stated the 20-year CIP sets out a tentative spending plan based on 127 estimated asset life but there is a secondary approval process before a project is done or an asset 128 is replaced. At this time, there is a more in depth justification discussion to determine if the 129 project or asset replacement should take place. Other cities may focus on a 5-year plan and 130 spend more time justifying projects and asset replacement during the next 5-years. What is 131 missing with this process is they are not looking at what is occurring in years 6 and beyond and 132 Item 3: Attachment A